A man loads solar panels on to a donkey. This is the "last mile" for energy distribution in many parts of the world and part of the solution for energy poverty.

Ideas on Energy is thrilled to have E+Co Co-Founder and CEO Christine Eibs Singer as a guest blogger this week. She recently traveled to Abu Dhabi to attend the World Future Energy Summit and accept an award on behalf of her organization for the great work they have done to address the global challenges of energy poverty and climate change. Christine noted on E+Co’s blog that there were not many other organizations at the event “focused on small scale clean energy solutions for the developing world.” In the entry below she reflects on why that was and how to address the challenge of energy poverty globally.

When one thinks about investing US$100 billion dollars in clean energy, visions of large wind turbines and hectares of solar panels dance through the mind. It is rare to find an investor whose dreams meander outside this box, to the rural communities and households that comprise the gaps in the grid, to the enterprises that can provide an answer to global energy poverty through the production and distribution of small scale solar systems, mini-hydro plants, household biogas units and fuel efficient cook stoves. It’s even rarer to find those who have actually pursued those investments.

This was the challenge I faced as a participant in the World Future Energy Summit in Abu Dhabi last month. The exhibit space was packed with large scale technologies. Deals were in the making, almost all of which were $500 million and up. So, when the UN Secretary General opened this summit with an address that set forth a vision of universal access to modern energy services, at a price tag of US$35 billion per year, I recognized the sharp disconnect to the equipment on display and the transactions being negotiated. This disconnect was further emphasized when Ditlev Engelhead of Vestas accepted the Zayed Future Energy Prize on behalf of their 22,000 staff, and I accepted on behalf of E+Co’s 48 staff.

Of course, the equipment on display and those deals being made are critical to meeting climate and energy challenges. But there’s more that has to happen. There are more than two billion people who live in energy poverty who have yet to benefit from the commercial and grid installations that filled the floors of the forum.

Energy poverty is a disease. Like malaria, polio and dengue it innately affects a person’s ability to live fully. But like these diseases, it can be treated. The equivalent of cures and vaccines exist, and the path to providing diagnosis, prescription and treatment has been paved over the last decade by battalion of companies, including small “powerhouses” such as E+Co, SELCO-India, Tecnosol, SELF, Toyola, AIDG, Winrock International, Barefoot Power, PowerSource Micro-Grid and D-Light.

The challenge to administering these treatments is the very scale of the disease: more than 400,000,000 households are infected; one-fifth of the world’s population endures the symptoms of energy poverty. As is often the case with widespread diseases, the cures for energy poverty are known. It is their dissemination and distribution, combined with the scale of the disease that makes the situation seem intractable.

E+Co’s 16 years of experience has shown that curing energy poverty requires that each infected household have access to just a few things: basic electricity for light and low-power appliances such as a cell phone; modern fuel and a stove for cooking; and small amounts of motor power for water pumping, sewing, grinding, husking, or other income improvements. Amazingly, the “cure” costs as little as $250 per household.

But to capture the interest of many of the investors I met in Abu Dhabi, one would need to package the cure for at least 2 million households in one fell swoop. But for E+Co and a few others, this bundling has not been attacked and few are willing to take on the high transaction costs that result from packaging tens of thousands of households, despite the financial, social, and environmental impacts that result. That is why I walked the exhibit aisles at WFES alone.

When E+Co began its work in the underdeveloped clean energy enterprise finance sector in 1994, no one else was focused on enterprises as a vehicle of delivering clean energy to combat poverty and climate change. While still relatively unique in our singular focus, we are now joined by others who see the market and impact opportunities for small and growing clean energy businesses in the developing world. They enter from the technology window; or focus on the productive uses and income that will result. Some are driven to create more equitable payment schemes for the energy poor or to reduce the health and deforestation impacts. Still others are here because they know the social equity possibilities that can result from energy access. But when the bottom line is drawn, all are here because they know the market and business possibilities exist. We know this because households at the base of the pyramid now spend $38 billion a year on dirty, fuel based lighting[1].

Our challenge is to bundle the energy access needs – to “scale” to 2 million households in a single transaction, while unbundling the capacity building and large scale finance to replicable efficient interventions. Those that have the experience to make this happen are out there, but like the cures to energy poverty, we too are decentralized.

Our most recent “back of the envelope” estimate is that we need 80,000 enterprises to meet the energy needs of 400 million households (or 2 billion people). I often tell the good news/bad news story about E+Co’s investment history: The good news is that we have invested in 268 clean energy businesses. The bad news is that’s more than anyone else in the world.

The movement suffers from lack of access to capital, just like the enterprises it will serve. While challenging and filled with risks, with the blending of public and private capital, we CAN pursue that first launch of enterprise development in order to reach the 80,000 enterprise mark over the next 20 years. E+Co and others know the risks, the opportunity, and core components of the solutions. There’s no need to re-invent the wheel. The growth of this movement will stimulate investment in the organizations and systems that can deliver the energy cure: the learning platforms, the catalytic seed capital, the market development. Just as health professionals and volunteers, community organizations and governments all reach out with public health programs, vaccinations and treatments, the same coordinated approach to distributing energy improvements can be pursued.

The successful outcome is a well financed and effectively implemented local energy enterprise, built on strong business fundamentals. But, rather than visions of large scale wind turbines and transmission and distribution lines, we also have to see visions of local entrepreneurs and their distribution channels. Part of the cure for the disease of energy poverty may look something like the picture above, the transport necessary for the “last mile” distribution.